BRG's CSO Consortium: Q1 2016

BRG assembles chief strategy officers from leading companies across a range of industries to share their insights on market trends, challenges they are facing, and best practices. Out of this dialogue comes the opportunity to deepen market understanding, share best thinking, benchmark, and collaborate with respected others.

Following are key takeaways from the latest discussion:

QUOTES OF THE DAY

“We have rewritten not only our strategic agenda, but also the purpose, beliefs, and behaviors that we expect, to create the cultural environment we need to deliver against our strategic agenda.”

“Before it was about being good at operational control, tactical delivery, command, and control. But we are finding those people don’t survive so well in a VUCA world. We need more engaged, more connected leaders.”

“We need to make a cultural shift in terms of values, to respect not just what we do, but how we do it.”

Things members care about…

The Economic Outlook

Why does it matter?

Global economic uncertainty keeps members up at night. Volatility, uncertainty, complexity, and ambiguity (collectively known as VUCA) look set to rise “exponentially,” and battening down hatches is the right thing to do.

What is the issue?

Continuing economic wobbles in China are being compounded by a sluggish US recovery, and as yet there is little indication of compensatory growth areas. Foreign currency fluctuations (although part and parcel of working in a global environment) are also affecting the bottom line, while oil, gas, coal, and metal prices continue to fall.

What is the bottom line?

Developments in the mining and energy sectors were described as “alarming,” with a number of companies near bankruptcy. Little opportunity for change is seen until there is more industrial growth in China and/or a softer dollar.

M&A is expected to contract as financing dries up, while EPS protection mainly involves having a range of scenarios in place in case revenues drop by x or y amount. On the currency front, members are generally keen to avoid hedging costs. One member said they simply wait until foreign currency holdings reach a certain threshold and then convert them to US dollars. These are repatriated when it is tax efficient.

Talent: Retaining it, developing it, importing it

Why does it matter?

Retaining the right talent has become as much of a priority as finding it, especially at the leadership level. At the same time, human capital requirements and skill sets are being reshaped by ongoing VUCA; to succeed, it is more important than ever to ensure deep integration between enterprise strategy and HR.

What is the issue?

Companies may be investing too much in selection, partly because there is a clear process for hiring, whereas development and retention are more nebulous. Simultaneously, existing leaders may lack the necessary flexibility, agility, creative thinking, and engagement with operational realities to bring the company forward. This means members must consider finding and/or developing different and more VUCA-capable leaders.

What is the bottom line?

Member CSOs are spending more time on nurturing HR-related issues than was customary in the past; their involvement spans development of job descriptions, the hiring process, and architecture of overall leadership expectations.

It was agreed that thinking about talent mobility, rather than talent development, could boost retention, while importing talent from VUCA forward sectors (such as mining or banking) is seen as a potentially useful option. To be successful, however, companies first need to look for individuals who have not only the right experience and culture, but also enough “overlap” (e.g., where a new hire comes from one highly regulated industry into another). Second, companies hiring these kinds of staff are serious about change and ready for the consequences. Third, one member added that if you want to fit a square peg in a round hole, you should have processes in place for knocking off a few corners.

Culture, environment, and the right (leadership) stuff

Why does it matter?

Finding and keeping the right talent is only half of the story. Companies must ensure their environment and culture are conducive to getting the best from staff and leaders. In a VUCA world, this means providing the right environment for leaders who are active, agile, curious, hands on, connected, and charismatic enough to engage employees.

What is the issue?

Culture and strategy must be properly aligned, and care must be taken to understand and incorporate not only what the company does, but how it is done. As one member said, the aim is to ensure we are all truly operating toward the same goal.

What is the bottom line?

In one case, better alignment has meant rewriting both the company’s strategic and cultural agendas, with the latter setting out the purposes, beliefs, and behaviors required to support the former. “Transformation functions” that focus on behavior and environment are another avenue, while one member is using a “one-a-month” deliverables strategy. This has two benefits: it provides concrete results and maintains momentum and expectations in the leadership team. Another member said reducing the number of company priorities has made it easier to ensure everyone is working toward the same goal. An internal company forum to introduce isolated leaders to each other—particularly those who have been in the organization for a while—has also been set up to help them leverage each other and galvanize change.

Meeting and summary notes protocol

This BRG CSO Quarterly Consortium session was held under the Chatham House Rule, which reads: "When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed."